By Murad Rakhimov | 2025-02-03

TASHKENT -- Almost three years after Russia launched its full-scale invasion of Ukraine, the Ukrainian defense industry is still growing.

After the Soviet Union collapsed, some 2,000 defense industry enterprises remained in Ukraine.

In the years since independence, Kyiv built a thriving export-oriented defense industry.

From 2014 to 2018, Ukraine was the world's 12th-largest weapon exporter.

Its main buyers during that period were China, which purchased 27% of Ukraine's exports, and Russia, which purchased 23%.

In 2016 Ukraine exported $756 million worth of weapons and products for military and special purposes: aircraft, armored vehicles, engines and missiles, according to Ukroboronprom.

Before 2014

Before Russia illegally annexed Crimea in 2014, Ukraine's defense industry focused mainly on exports since the army did not buy weapons. Over time, military cooperation with Moscow ceased.

"Before 2014 there were no [domestic] purchases because the Ukrainian military was shrinking, and the defense industry was exporting $1 billion worth of products annually," Mykhailo Samus, director of the New Geopolitics Research Network and a cofounder of the Consortium for Defense Information, told Kontur.

"The main things happening were production by Ukrainian industry or the modernization of Soviet military vehicles that Ukraine had in warehouses after the fall of the Soviet Union."

Before the collapse, Ukraine had a rather developed defense and aviation industry, noted Alisher Ilkhamov, director of the London-based Central Asia Due Diligence center.

Evidence of that industry's vitality included the siting and maintenance of Soviet nuclear weapons in Ukraine, representing a vote of confidence by Moscow.

Ukraine transferred the nuclear missiles to Russia in accordance with the 1994 Budapest Memorandum.

"However, in the post-Soviet period, especially when [former President] Viktor Yanukovych was in power, Ukraine's defense industry fell apart, just like its entire defense system. This was mainly because of rampant corruption," Ilkhamov told Kontur.

"Far-reaching Russian spy networks played a role too," he added.

As a result, by the time Moscow unleashed a hybrid war against Kyiv in 2014, Ukraine's entire defense system had essentially collapsed, and the government was selling off its own weapons for export.

New missiles

Under former President Petro Poroshenko, who enacted some anticorruption reforms and shored up the country's defense capability, the situation improved but not by much, Ilkhamov said.

Two examples illustrated the sorry state of Ukraine's defense at the time, he said.

"In 2016, the controlling stake in the company Motor Sich, which held a unique technology to produce aircraft engines, was sold to a Chinese company," Ilkhamov said. "Türkiye used these engines to make Bayraktar drones. This deal wasn't canceled until [President Volodymyr] Zelenskyy took office [in 2019]."

"In 2022, [the government] nationalized the factory, as well as several other large and strategic businesses," Ilkhamov said.

He also pointed to the Neptune missile, whose development Ukraine halted before Zelenskyy took office. By a stroke of luck, someone preserved just about the last existing Neptune. This artifact made new production possible.

This missile ultimately played a central role in combat missions in the Black Sea basin, and particularly in the sinking of Russia's Moskva cruiser in April 2022.

Other achievements in the past few years during the ongoing war were the start of domestic production of 155mm artillery munitions and the ramped-up production of the Bohdana self-propelled howitzer, which uses them.

"Ukrainian artillery is now self-propelled artillery. Several dozen 155mm Bohdana systems are produced per month. That's more than European factories can produce right now," said Samus.

Last August, Ukraine successfully tested the Hrim-2 -- also known as the Sapsan -- the first domestically produced ballistic missile, which had been under development since the mid-2000s.

Zelenskyy later announced that Ukraine was testing four additional types of missile. In December, the army added a new rocket drone, the Peklo, to its arsenal.

'Dronecentrism'

Zelenskyy's accession to power was accompanied by a breakthrough in the defense industry, primarily in the development and manufacture of lethal drones.

Russia's full-scale invasion has demonstrated that modern warfare is drone warfare.

"To a great extent this happened because of the success Baku had using this type of weapon in the second Karabakh war in 2020. At the time Azerbaijan was using Turkish Bayraktar drones," Ilkhamov said.

After finding Bayraktars to be expensive and "not very effective" against Russia early in the war, Kyiv "decided to start buying cheap drones and making drones domestically," said Ilkhamov.

Ukraine founded several companies, and they gained wide latitude in developing drones. They have different purposes, including sea drones and the Peklo and Palianytsia long-range cruise missiles.

In the first 11 months of 2024, Ukraine produced more than 1.2 million drones, according to the Defense Ministry.

Some of the drones have range of up to 2,000km, Ukrainian military intelligence said in December.

The country is capable of producing 4 million drones per year, Zelenskyy said last October.

"The technology started developing and being upgraded in earnest, and as a result, Ukraine's use of drones is qualitatively superior to that of the Russian military," Ilkhamov said.

"Of course, the bets are on 'dronecentrism,'" Samus said. "These days there's a technological revolution going on in Ukraine, and now every brigade has ... drone battalions."

Ukraine created the world's first service branch devoted just to drones. This force includes air, ground and sea drones.

Investing in Ukraine

Ukraine has created a new defense industry and that the country "is already producing things that we did not have before," Zelenskyy said in October in a speech posted online.

"For Ukraine it is a matter of great importance that not only partner countries but also defense companies from around the world are increasingly interested in cooperating with us -- with our defense sector," Zelenskyy said.

"Some of the agreements are already implemented," he said, citing "investment in defense production in Ukraine."

"Much more is being prepared," he said.

Last year Ukrainian defense companies received $931 million in orders from foreign buyers, according to the government. The largest buyers were Denmark, the United Kingdom, Norway and the European Union, which contributed $436 million, using profits from frozen Russian assets.

Much now hinges on investment, say analysts. Ukraine's manufacturing base is capable of producing many more missiles, drones, shells and combat vehicles than it does now, but lacks the funding.